I recognize as well as anyone just how hard it is to let go of a good deal. There is that human trait that drives us to focus on the bird in the hand and try not to think about the future.

The bird in the hand, that low life insurance rate you are paying right now, can be the perfect solution and it can also be a false sense of security. People, life insurance consumers, are so attracted to 10 year term insurance rates because, face it, they are cheap. The other side of that deal is that there are plenty of life insurance agents out there who will take the easy deal and not try to explain that a 10 year policy is not the appropriate way to deal with a 20 or 30 year need.

Now, don’t get me wrong. If all a person can afford is a 10 year term, better that than nothing. But I also believe that if the need is, say 20 years, a person should strongly consider a lower amount of insurance that will stay in force for the full length of the need.

Tricky thing, balancing need and budget, but the truth is that most 10 year term is not purchased because that’s all a person can afford. Most 10 year term is purchased out of ignorance of the implications of that decision. People don’t consider what happens if there is a health change. They don’t have the agent run the numbers so they will have an idea what it would cost to get a new policy at the end of the 10 years. The cost of waiting very often makes the small difference in initial price seem foolish in comparison.

Just an example. Let’s use a 50 year old guy in preferred health. He buys $500,000 of 10 year term, even though he admits that his mortgage payoff and retirement will likely be more of a 20 year need. The good news is that the policy has a rate of $660 annually. Very affordable. If he went with the 20 year term now, it would be $1140 annually. But, he buys the 10 year term.

Two scenarios. Over the next 10 years his health remains the same and he decides to buy a new 10 year term. The new policy is $1700 annually. Over the full 20 years he will pay $23,600 for the life insurance coverage. It wouldn’t be a huge savings, but if he had purchased a 20 year term in the beginning, his total cost would have been $22,800.

The real problem comes with health changes. Let’s say, for instance, that he develops diabetes before he reaches age 60. Assuming the best possible scenario, his new 10 year term at age 60 will cost $2265.00, making his 20 year cost $29,250.

Bottom line. There is a cost to waiting and there can be a huge cost to gambling on your future health. Make your agent show you all sides of the story before you make your final decision. It could be that having two policies with different term lengths could be the answer, a method called staggering.

Every year millions are needlessly declined for life insurance or approved and paying far more than they need to. For 14 years, I have specialized in turning those situations around and finding the right life insurance solution at affordable rates. I give every client the personal attention they deserve.
If you need assistance with your Life Insurance, please call me TOLL FREE at (866) 539-7914 for a free consultation .

2 responses to “The Cost Of Waiting!”

Wow that is some great advice. Some better advice would be to find a company that has guaranteed insurability at the end of their term. Where if they were to become uninsurable or at the least rated at the end of their term, that would not affect their premium. Now that’s a revolutionary concept. I put young people in policies all the time on a ten year term because they can’t afford the proper length of time currently. We have a plan to readdress their coverage in a couple of years to add length of term at a price they can afford, but NEVER do they sacrifice amount of coverage because of price. We also implement an investment strategy so that they begin to build up their net worth. Of course you’d need to be investment licensed to do something that monumental for your client. We never have to sacrifice or over charge, reduce their coverage or sell them a permanent policy to hope they begin to save for their future. DO YOUR HOMEWORK. Get the coverage you need at the price you can afford.

Well Jennifer, That was a lot of dancing around without offering much substance. I sort of get the sense that you agree with me on life insurance, but think I am substantially lacking because I’m not investment licensed.

We all choose to specialize or diversify based on our goals. My goal is to be the best I can be in providing life insurance services. I refer clients to investment licensed professionals to fill that need.

It’s refreshing to hear that you believe budget and the amount of coverage are very important and that annual reviews are the avenue to get your clients where they ultimately should be.

Your comment about guaranteed insurability was interesting. Surely you are familiar with conversion in term policies. If you’ve studied guaranteed renewable term, you also know that, just as level term becomes unaffordable with age, so does guaranteed renewable term.

If you’ve read all the posts on term, staggering term and conversion over the past year, you would know that the advice I am giving my clients is not lacking.

We Really DO Come Through for our Clients.

“Thank you so much for the effort you put into securing my husband’s life insurance policy. As a person diagnosed with bi-polar type II, he was treated as nearly impossible to insure by our old insurance agent. Yet, he is fully functioning with this disease and has a flourishing career. You were able to hear our frustrations about the stigma attached to the bi-polar label--that all bi-polar patients are depressive or suicidal-- and teach the insurance company’s underwriter the difference between a functioning bi-polar II adult and a person whose disease is far more of a liability to an insurance company. Thank you for the effort you put into securing my husband’s policy; with your help, we ended up with a policy that costs the same as a healthy, non-smoking, non-bi-polar adult. Moreover, your service as our agent was impeccable. You followed up every step of the way. We can’t wait to tell others--with or without illness-- about your service.”